Gildan Activewear Inc.

For Q2 2026, net sales from continuing operations were $1.58 billion, up 72.3% year over year, and adjusted diluted EPS from continuing operations was $1.28, up 32% from $0.97. Gross profit was $460 million, or 29.1% of sales, versus $289 million, or 31.5%, last year; adjusted gross profit was $545 million, or 34.5% of sales. Adjusted operating income was $352 million, and adjusted operating margin was 22.3%, down 40 bps year over year but above guidance. Net financial expenses were $69 million, and GAAP diluted EPS from continuing operations was $0.49 versus $0.91 last year. For the first half, operating cash flow was $68 million and free cash flow was about $17 million after $51 million of capex; net debt was about $4.69 billion and leverage was 3.2x. Full-year 2026 guidance now calls for revenue at the low end of the prior $6.0 billion-$6.2 billion range, adjusted operating margin of about 21.8%, adjusted EPS of $4.65-$4.75, capex of about 3% of sales, and free cash flow of about $1 billion. Q3 guidance is about $1.65 billion of net sales, adjusted operating margin of about 26%, and an adjusted tax rate of about 18.5%.

Glenn Chamandy framed the quarter as evidence that the HanesBrands acquisition is already creating a stronger, more efficient combined company. He emphasized that about $100 million of synergies are already implemented for 2026, with another $100 million targeted for 2027 and at least $250 million of annual run-rate cost synergies expected over three years. His tone was upbeat and strategic, stressing reinvestment into Hanes, a more modern brand platform, and a clear focus on profitable growth, debt reduction, and long-term shareholder value.

Luca Barile walked through the numbers and the guide change in detail, highlighting the $1.58 billion of Q2 sales, 34.5% adjusted gross margin, $352 million of adjusted operating income, and $1.28 of adjusted EPS. He said the outlook assumes about $220 million of IEEPA tariff refunds in 2026, with roughly half reinvested in retail marketing, promotions, product innovation, and packaging, while the recurring tariff change for CAFTA-DR sourcing provides a structural benefit that supports the 21.8% full-year operating margin base. He also pointed to $68 million of operating cash flow in the first half, about $17 million of free cash flow after $51 million of capex, $92 million returned via dividends, and $4.69 billion of net debt at a 3.2x leverage ratio. On capital allocation, he said the HAA sale proceeds will go toward debt paydown, and buybacks are expected to resume when leverage returns to the midpoint of the 1.5x to 2.5x target range.

Analysts focused heavily on whether the raised EPS outlook is pulling forward future earnings and whether the updated base still supports the longer-term growth targets; Luca said yes, arguing the 2026 margin base reflects structural tariff benefits and creates a foundation for 2027 and beyond. Another major topic was the large increase in receivables and days sales outstanding; management said the trend reflects growth initiatives, new brand launches, and channel expansion rather than deterioration in customer health, and they expect working capital to fall below 30% of sales by year-end. Questions also probed the $220 million tariff refund and the Barbados subsidy, with management explaining that about $37 million of the Barbados subsidy hit in Q2 and that the tariff refund will be split between reinvestment and structural benefit.